Characteristics of a Company
1. Distinct Legal Entity: Upon legal incorporation, a company obtains a separate legal identity, independent of its members. It can hold property, incur debts, and engage in contracts in its name.
2. Limited Liability: Members’ liability is confined to their contributions, protecting them from personal liability beyond their share value. This contrasts with unlimited liability in partnerships.
3. Continual Existence: A company persists unless dissolved, or it achieves its objectives. Changes in membership don’t impact its existence.
4. Ownership Distinction: Company property is distinct from member’s assets and a member cannot claim ownership of a company’s asset.
5. Share Transferability: Shares can be transferred, subject to conditions, allowing flexibility for shareholders.
6. Common Seal: Essential for agreements, the common seal is the company’s authorized signature, ensuring legal validity.
7. Legal Capacity to Sue and Be Sued: A company can initiate or respond to legal actions independently.
8. Separate Management: Management responsibilities lie with the Board of Directors, separate from shareholders.
9. One Share-One Vote Principle: Voting is based on the number of shares held, emphasizing a democratic process.